Tuesday, February 16, 2010

Going Through House Shopping Hell With A Realtor Devil

My mind hasn't been concentrating too much lately on this blog. You see, my wife and I have been in deep negotiations to purchase a house in the past month. We thought it was the perfect house (notice the past tense). Great school district, great floor plan, and killer views from every room. It was also a short sale. It was not cheap for a short sale as the owner took out a huge chunk of money a couple of years ago during the real estate fantasy bubble. Now he is divorced and the economy has done a number on his business. He can't afford to pay back the bank (one of the bailed out financial institutions). So we gave what we thought was a fair, though not cheap, offer and the seller accepted.

If anybody has ever gone through a short sale you know the buying process is not routine. Just because the seller accepts the price doesn't mean the bank, who owns the deed, will. Despite a program the bank instituted to expedite short sales, it still took a couple of weeks to get full approval. Then there were legal complications because of his divorce (the wife was still living in the house rent free and didn't want to move out). In the meantime the seller's realtor assured us we had the highest offer and he wasn't entertaining any other offers because the seller wanted to sell ASAP and stop making payments on his overdue mortgage.

Whenever the realtor or the bank needed us, we dropped everything to get it done. Need a signature? We're there. Need proof of financing? When can we fax it to you? We jumped through so many hoops to get this done. Here in Southern California it is virtually impossible to buy a nice house using conforming loans so jumbo loans are a must. And these days, banks are not willing to do jumbo loans without full documentation plus the blood of your first born, and possibly second born child. Down payment? Check. Credit rating adequate? Check. Proof of every last cent you own in this world? Got it.

Then last night we thought we finally got everything covered. We signed the last contract the bank sent to us that agreed to the short sale. At around 5:00 our realtor faxed the papers to their realtor. We thought we had finally started our escrow process. We started planning for the children's room, the housewarming party, where the big screen TV with Blu Ray and surround sound I was planning on getting this Christmas would look the best.

Suddenly at 7:00 we got a call from our realtor with devastating news. The seller had received two more offers, both higher than ours, and both ALL CASH. My head was spinning from this sudden turn of events. There was no way we could win a bidding war when the other party can offer all cash up front. My first reaction was disappointment, naturally. But my second reaction was pure white hot anger at the seller's agent. Despite his previous statement to us that he and the seller were not interested in soliciting other bidders, he obviously had been shopping our offer around this past weekend. There is no other explanation for the magical appearance of other buyers right at the last second.

I tried to console myself and my wife that this is just business. It's all about money. It's not personal. The seller has every right to seek higher offers for his house. According to the National Association of Realtors Code of Ethics, "When acting as listing brokers, Realtors shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing."It happens all the time on eBay, where you think you have the highest offer and with 30 seconds to go before the auction ends an anonymous buyer swoops in and grabs your prized Colecovision game cartridge from you. It sucks then and it really sucks now. But I can't help but feel misled by the whole process, the seller, his realtor, and the bank. We think this prolonged ordeal was done just to give the bank and seller more time to search for other buyers. We were too innocent to realize that wolves were circling around the house we thought was ours and they were abetted by the realtor.

We are so disgusted by this entire process that we have temporarily stopped searching for a house. And I'm not sure that if we do find another house we like as much we would feel comfortable with the entire process until the keys are actually in our hands. Who said there is a real estate slump in this country?

This also puts into crystal clear perspective the status of physicians in this country. We are at best upper middle class in stature. On the coasts, we're just barely considered middle class. There are millions of other people in this country who make more money than us and whose incomes are not dictated by some anonymous government agency working in the bowels of Washington far removed from the actual work of patient care.